<PAGE>
Annual Report
- --------------------------------------------------------------------------------
For yield, price, last transaction, and current balance, 24 hours, 7 days a
week, call:
1-800-638-2587 toll free
625-7676 Baltimore area
For assistance with your existing fund account, call:
Shareholder Service Center
1-800-225-5132 toll free
625-6500 Baltimore area
T. Rowe Price
100 East Pratt Street
Baltimore, Maryland 21202
This report is authorized for distribution only to shareholders and to others
who have received a copy of the prospectus of the T. Rowe Price Latin America
Fund.
T. ROWE PRICE
Invest With Confidence(R)
LAM
T. ROWE PRICE
- -------------
LATIN AMERICA FUND
October 31, 1994
[ART WORK APPEARS HERE]
<PAGE>
- --------------------------------------------------------------------------------
Fellow Shareholders
- --------------------------------------------------------------------------------
Latin American markets burst back to life in the Fund's fiscal third quarter
after a lacklustre spring. Favourable political developments drove Brazilian
stocks to new highs and revived Mexico, while robust economic fundamentals
supported the equity markets of Chile, Colombia, and Peru. Even stocks in
Venezuela, the last major country in the region to tackle its economic malaise,
enjoyed a sharp rally.
Although the Fund posted a strong return for the past three months, it
trailed the unmanaged benchmark index for the quarter and since inception. The
primary reasons were our underweightings in the Brazilian and Chilean equity
markets and the limited access to local Chilean stocks afforded to foreign
investors. The Latin American market is a highly volatile part of the investment
universe, and both relative and absolute returns can be erratic over short time
periods. We are disappointed in our early relative performance, but feel
confident that our approach will provide competitive returns over the longer
term.
- --------------------------------------------------------------------------------
Performance Comparison
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Periods Ended 10/31/94
Since Inception
3 Months On 12/29/93
---------------------------
<S> <C> <C>
Latin America Fund 11.7% 3.2%
MSCI EMF Latin America
Index 14.9 20.2
</TABLE>
- --------------------------------------------------------------------------------
Brazil posted impressive gains of 79.5% in U.S. dollar terms since the
beginning of 1994, as investor euphoria anticipated the October presidential
election results. Volatility of the Morgan Stanley Capital International
Emerging Markets Free Latin America Index was particularly due to a few large,
state-controlled companies whose stock prices soared on hopes that the new
government would privatise them. Your Fund had been invested primarily in
companies that are largely free of government control and could be expected to
post more durable long-term resu lts even if the elections had disappointed the
market.
In Chile, we have an 8% exposure to equities compared with 12% for the
Index. During the past 10 months, shares available to local investors rallied
more than 47% in U.S. dollar terms. However, as foreign investors we are limited
to purchases of American Depositary Receipts (ADRs) and Chilean country funds
traded on foreign exchanges, both of which appreciated only 5% to 10% since the
Fund's inception.
MARKET REVIEW
In BRAZIL, the market continued to move erratically in 1994, rising 40% in
January and February and then plunging even more from March to May. The major
catalyst was the presidential election outcome in October, with the stock market
fluctuating beforehand in response to varying public opinion polls. As former
Finance Minister Fernando Cardoso's approval rating climbed in July and August,
the market soared, rising over 100% from the May low and gaining an astonishing
35% in dollar terms during the last quarter.
Cardoso has owed his political victory to a successful financial plan
for combating inflation, which topped 40% in June alone. By introducing the
real, a new currency effectively linked to the dollar, inflation dropped to
below 2% a month, transforming the economic prospects of ordinary Brazilians.
Cardoso takes office on January 1 and the battle against inflation will still
need fundamental changes: reform of the constitution, revision to the tax,
social security, and banking systems, and the introduction of a privatisation
programme. If these reforms can be instituted, we believe Brazil, one of the
world's largest economies and one that has suffered from a decade of neglect,
will offer great investment potential. Despite strong appreciation in the last
two years, the market is undervalued compared with the U.S. market where, for
example, the price/book value ratio is twice as high. During the quarter, we
added to holdings in the state telephone company TELEBRAS and steel company
USIMINAS.
<PAGE>
[GEOGRAPHIC DIVERSIFICATION GRAPH APPEARS HERE]
In MEXICO, the PRI candidate Ernesto Zedillo won the presidential
election and confirmed his support for the current economic management system by
renewing the Pacto agreement, a combination of wage increases and growth targets
developed by government, businessmen, and unions. Despite worries about economic
growth, second quarter gross domestic product (GDP) far exceeded first quarter
figures, reflecting the high levels of infrastructure spending in the public
sector.
A recent visit to Mexico confirmed for us the contrast between the
booming construction sector and the lacklustre levels of consumer demand. But as
inflation falls toward a government-targeted 4% and interest rates ease,
economic growth should become more widespread. We continued to focus on the
long-term growth potential of the retailer CIFRA and cement giant CEMEX. We
reduced the Fund's weighting in the utility TELEFONOS DE MEXICO during the
quarter, and added holdings of the construction company GMD.
The most prominent market concern in Mexico remains political
instability rather than economic reform. The September assassination of PRI
Secretary General Francisco Ruiz--following the March murder of Donaldo
Colosio--underlined the uncertainty.
In ARGENTINA, the economy is growing at 6% and inflation is below 4%.
With exports to Brazil picking up, worries about a deteriorating picture on the
trade deficit are diminishing. Despite the promising economic outlook, the
peso's link to the dollar kept the stock market struggling this year as the U.S.
bond market declined. Presidential elections looming next year may add to the
uncertainty. As a result, we remain neutrally weighted at 11%.
Elsewhere in the region, the stock markets of CHILE and COLOMBIA made
steady progress, with sectors such as cement, banking, and beverages
particularly strong. In PERU, the Fuji-mori government has continued its
aggressive programme to privatise state assets; over $2 billion has been raised
from public sector sales in the past two years. The programme should be complete
by June 1995, leaving the government as guardian of health care and national
security but freeing the rest of the economy from government control. With
Peruvian GDP forecast at 9% this year, the stock market offers great potential.
During the quarter, we added holdings of CEMENTOS LIMA and SOUTHERN PERU COPPER.
The government in VENEZUELA, which came to power in 1994, suffered a
tumultuous few months due to a full-scale banking crisis and currency collapse.
President Rafael Caldera's government nationalised seven failing banks at a cost
of over $10 billion, and introduced a controversial programme of tax hikes and
exchange and price controls.
With inflation over 70% and GDP declining 4% this year, the economy has
obviously not yet turned around. Gasoline prices, utility tariffs, and the
privatisation programme still need ironing out, but the worst appears over. The
market rallied principally because local investors chose stocks as the best
hedge against inflation. With several well-managed, internationally competitive
companies traded publicly, we believe the market looks interesting. Therefore,
we added to our holdings of the textile group SUDAMTEX and iron producer
VENPRECAR.
2
<PAGE>
INVESTMENT POLICY AND OUTLOOK
Despite the volatility of the Latin American stock markets, the outlook for
economic growth remains strong. After several decades of economic mismanagement,
the infrastructure remains inadequate, but the disposable income of the young
population should start to grow.
We welcome all our new shareholders and appreciate the trust you have
placed in us.
Respectfully submitted,
/s/ Martin G. Wade
Martin G. Wade
President
November 18, 1994
- --------------------------------------------------------------------------------
Industry Diversification
- --------------------------------------------------------------------------------
October 31, 1994
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Utilities 29%
- -----------------------------------------------------------------------
Consumer Goods 22
- -----------------------------------------------------------------------
Basic Industry 19
- -----------------------------------------------------------------------
Financial/Insurance 8
- -----------------------------------------------------------------------
Capital Goods 7
- -----------------------------------------------------------------------
Energy 6
- -----------------------------------------------------------------------
Miscellaneous 1
- -----------------------------------------------------------------------
Reserves 8
- -----------------------------------------------------------------------
Total Net Assets 100%
- -----------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
Security Classification
- --------------------------------------------------------------------------------
October 31, 1994
<TABLE>
<CAPTION>
Cost Market Value
Percent of Net Assets (000) (000)
- -----------------------------------------------------------------------
<S> <C> <C>
Common Stocks, 65.3% $ 140,269 $ 129,722
- -----------------------------------------------------------------------
Preferred Stocks &
Rights, 26.9% 42,921 53,339
- -----------------------------------------------------------------------
Bonds, 0.2% 290 344
- -----------------------------------------------------------------------
Short-Term
Investments, 6.1% 12,068 12,068
- -----------------------------------------------------------------------
Total Investments, 98.5% 195,548 195,473
- -----------------------------------------------------------------------
Other Assets Less
Liabilities, 1.5% 2,963 2,962
- -----------------------------------------------------------------------
Total Net Assets, 100.0% $198,511 $198,435
- -----------------------------------------------------------------------
</TABLE>
3
<PAGE>
- --------------------------------------------------------------------------------
Twenty-Five Largest Holdings
- --------------------------------------------------------------------------------
October 31, 1994
<TABLE>
<CAPTION>
Percent of
Net Assets
----------
<S> <C>
Telefonos de Mexico ADS, Mexico 8.8%
- -------------------------------------------------------------------
Tolmex 'B', Mexico 6.1
- -------------------------------------------------------------------
Cifra ADR, Mexico 5.8
- -------------------------------------------------------------------
Telebras, Brazil 5.7
- -------------------------------------------------------------------
Telefonica de Argentina, Argentina 3.5
- -------------------------------------------------------------------
Compania de Telefonos de Chile ADR, Chile 3.1
- -------------------------------------------------------------------
Companhia Vale Rio Doce ADR, Brazil 3.0
- -------------------------------------------------------------------
Banco Bradesco, Brazil 2.6
- -------------------------------------------------------------------
Cemex 'B', Mexico 2.3
- -------------------------------------------------------------------
Chilectra ADR, Chile 2.3
- -------------------------------------------------------------------
Grupo Mexicano de Desarrollo, Mexico 2.3
- -------------------------------------------------------------------
Empresa Nacional de Electricidad ADR, Chile 2.2
- -------------------------------------------------------------------
YPF Sociedad Anonima ADR, Argentina 2.0
- -------------------------------------------------------------------
Grupo Financiero Bancomer, Mexico 1.8
- -------------------------------------------------------------------
Naviera Perez, Argentina 1.8
- -------------------------------------------------------------------
Usiminas, Brazil 1.7
- -------------------------------------------------------------------
Electrobras, Brazil 1.7
- -------------------------------------------------------------------
Lojas Americanas, Brazil 1.4
- -------------------------------------------------------------------
Companhia Siderurgica Nacional, Brazil 1.4
- -------------------------------------------------------------------
Brahma, Brazil 1.4
- -------------------------------------------------------------------
Companhia Energetica Minas Gerais, Brazil 1.3
- -------------------------------------------------------------------
Buenos Aires Embotelladora ADR, Argentina 1.1
- -------------------------------------------------------------------
Multibras Eletrodomesticos, Brazil 1.0
- -------------------------------------------------------------------
Grupo Televisa ADR, Mexico 1.0
- -------------------------------------------------------------------
Telesp, Brazil 1.0
- -------------------------------------------------------------------
Total 66.3%
- -------------------------------------------------------------------
</TABLE>
[PERFORMANCE COMPARISON CHART APPEARS HERE]
- --------------------------------------------------------------------------------
Fiscal-Year Performance
- --------------------------------------------------------------------------------
Period Ended 10/31/94
Since Inception on
12/29/93
-----------------
3.2%
- --------------------------------------------------------------------------------
Income return and principal value represent past performance and will vary.
Shares may be worth more or less at redemption than at original purchase.
- --------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------
REVIEWING YOUR INTERNATIONAL INVESTING STRATEGY
- --------------------------------------------------------------------------------
Not so very long ago, we probably would not have addressed this issue, because
relatively few U.S. investors had an international investing strategy to review.
In recent years, however, investor focus has broadened appreciably, and now
global investing seems finally to be catching up with "global consuming."
The merits of placing a portion of your financial assets in overseas
investments have become widely recognized, as evidenced by the dramatic growth
of international mutual fund assets. Amid all the investment uncertainties
generated by rising interest rates this year -- both in the U.S. and a number of
other countries -- our international equity funds continued to expand
impressively.
The historic evidence is clear that a prudent equity diversification
strategy that includes foreign stocks can reduce the year-to-year volatility of
an equity portfolio and, over time, enhance overall returns. Volatility may be
reduced because foreign stocks often move in divergent directions from the U.S.
market. With over half of all stocks in the world originating and trading
outside the U.S. -- many in countries growing faster than the U.S. --it can be
argued that the investor who restricts his or her portfolio entirely to U.S.
securities is less prudent than the one who diversifies more widely.
Since you are an international investor, we do not want to preach to
the converted. Rather, we want to suggest you take a minute to review your T.
Rowe Price international investments to ensure they are in line with your
financial strategy and your overall portfolio.
AN INTERNATIONAL ALLOCATION
Except in unusual circumstances, we believe a majority of an investor's
international equity exposure should be in a core fund that has a broadly
diversified portfolio of well-established companies around the world. Our
International Stock Fund is designed to be such a core holding. If you have a
particular interest in a certain region, you may want to put some assets in a
more specialized fund. The New Asia, Europe, Latin America, and Japan Funds have
narrow geographic focuses, while our International Discovery Fund emphasizes
rapidly growing smaller companies in all of those areas. Without the conviction
to stick through potentially tough periods, you should be cautious about
investing in regional funds, which may have greater price volatility.
Don't base your allocation decisions solely on the past performance of
any stock market, and keep in mind the risks of foreign investing, including the
possibility of unfavorable currency exchange rates. You may want to consider
shifting a portion of your investment dollars into a particular international
asset over a period of time, instead of all at once. By focusing on your
particular financial objectives, the length of time in which you hope to achieve
them, and your willingness to accept risks rep resented by various investments,
you should be in a good position to structure your international investment
portfolio.
This report has been preceded or is accompanied by a prospectus.
5
<PAGE>
- --------------------------------------------------------------------------------
Statement of Net Assets (Value in thousands)
T. Rowe Price Latin America Fund / October 31, 1994
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
ARGENTINA -- 11.3%
- ------------------------------------------------------------------------------------------------------------
Value
-----------
<C> <S> <C>
COMMON STOCKS
20,000 shs. Banco Frances del Rio de la Plata..................................... $ 170
8,000 Banco Frances del Rio de la Plata ADR (USD)........................... 205
55,380 *Buenos Aires Embotelladora ADR (USD).................................. 2,125
220,000 *Cadipsa............................................................... 414
24,500 *Capex GDR (USD)....................................................... 472
30,000 Central Puerto........................................................ 198
9,000 Central Puerto ADR (USD).............................................. 297
402,733 *Colorin............................................................... 455
65,366 Juan Minetti.......................................................... 402
33,000 *Mirgor ADS (USD)...................................................... 297
90,500 Modelo Terrabusi...................................................... 387
26,000 Molinos Rio de la Plata............................................... 227
650,321 Naviera Perez......................................................... 3,513
160,000 Polledo............................................................... 338
39,000 Quilmes Industrial (USD).............................................. 1,024
106,143 Telefonica de Argentina ADR (USD)..................................... 6,594
6,635 Telefonica de Argentina ADS (USD)..................................... 412
71,390 Transportadora de Gas del Sur ADS (USD)............................... 839
164,312 YPF Sociedad Anonima ADR (USD)........................................ 3,964
TOTAL ARGENTINA 22,333
- ------------------------------------------------------------------------------------------------------------
BELIZE -- 0.2%
- ------------------------------------------------------------------------------------------------------------
COMMON STOCK
28,000 Belize Holdings (USD)................................................. 500
- ------------------------------------------------------------------------------------------------------------
BRAZIL -- 32.7%
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS
79,000 *Capco Automotive Products (USD)....................................... 978
96,744 *Companhia Energetica Minas Gerais ADR (USD)........................... 2,612
59,350,000 Companhia Siderurgica Nacional........................................ 2,727
8,484,863 Electrobras........................................................... 3,305
49,844,000 Telebras.............................................................. 2,024
11,646
PREFERRED STOCKS & RIGHTS
15,133,720 shs. Acesita............................................................... $ 1,434
2,225,000 *Alpargatas Santista Textiles.......................................... 527
105,000,000 *Artex................................................................. 783
292,000 *Bahia Sul Celulose.................................................... 249
548,685,396 Banco Bradesco........................................................ 5,132
53,568,000 Banco Nacional........................................................ 1,458
7,744,000 Brahma................................................................ 2,723
2,632,000 *Casa Anglo Bras....................................................... 686
36,100,000 Ceval Alimentos....................................................... 577
265,200 Companhia Energetica Minas Gerais..................................... 27
110,480 Companhia Vale Rio Doce ADR (USD)..................................... 5,994
141,000 *Cosipa................................................................ 429
3,599,998 Coteminas............................................................. 1,535
1,023,000 *Dixie Lalekla......................................................... 745
213,950 rts. *Dixie Lalekla......................................................... 0
12,000,000 shs. Duratex............................................................... 881
750,000 Eucatex............................................................... 480
528,000 Frigobras............................................................. 572
876,000 Industrias Villares................................................... 207
33,850,000 Ipiranga Petroleo..................................................... 641
18,801,000 Kepler Weber.......................................................... 200
93,450,950 Lojas Americanas...................................................... 2,877
4,722,000 *Mesbla................................................................ 911
382,500 *Moinho Santista....................................................... 1,495
1,310,000 Multibras Eletrodomesticos............................................ 2,017
12,563,000 Petrobras............................................................. 1,934
7,360,000 Pettenati sa Malhas Confeccoes........................................ 322
557,932,163 Refrigeracao Parana................................................... 1,684
6,954,000 *Sifco................................................................. 774
1,136,294 Telebras.............................................................. 55
192,690 Telebras ADR (USD).................................................... 9,249
3,847,445 Telesp................................................................ 1,959
56,897 rts. *Telesp................................................................ 1
2,090,000,000 shs. Usiminas.............................................................. 3,438
2,548,500 Weg................................................................... 1,343
53,339
TOTAL BRAZIL 64,985
- ------------------------------------------------------------------------------------------------------------
CHILE -- 8.5%
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS
17,000 Chile Fund (USD)...................................................... 846
86,720 Chilectra ADR (USD)................................................... 4,531
65,846 Compania de Telefonos de Chile ADR (USD).............................. 6,198
6,700 Cristalerias de Chile ADS (USD)....................................... 144
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
CHILE (Cont'd)
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
155,000 shs. Empresa Nacional de Electricidad ADR (USD)............................ $ 4,359
12,000 Empresas Telex de Chile ADR (USD)..................................... 221
26,800 Laboratorio Chile ADR (USD)........................................... 492
TOTAL CHILE 16,791
- ------------------------------------------------------------------------------------------------------------
COLUMBIA -- 0.7%
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS
13,000 Bancols GDS (USD)..................................................... 138
18,000 Cementos Diamante GDS (USD)........................................... 437
15,000 *Cementos Paz del Rio ADR (USD)........................................ 371
19,000 Maderas y Sinteticos Sociedad Anoma ADR (USD)......................... 532
TOTAL COLUMBIA 1,478
- ------------------------------------------------------------------------------------------------------------
MEXICO -- 36.8%
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS
496,446 Cemex `B'............................................................. 4,610
4,076,140 *Cifra ADR (USD)....................................................... 11,454
57,000 Consorcio Grupo Dina ADS (USD)........................................ 734
12,000 *Corporacion Geo....................................................... 82
178,455 Desc `B'.............................................................. 1,319
269,200 *Embotelladores del Valle Anahuac...................................... 1,285
183,000 Empaques Ponderosa.................................................... 737
315,000 *Grupo Fernandez....................................................... 545
155,453 Grupo Financiero Bancomer ADS (USD)................................... 3,576
2,555 Grupo Financiero Bancomer GDS (USD)................................... 58
38,000 *Grupo Industrial Durango ADR (USD).................................... 694
3,150 *Grupo Iusacell ADR (USD).............................................. 88
47,071 *Grupo Iusacell ADS (USD).............................................. 1,448
127,990 *Grupo Mexicano de Desarrollo (Series B) ADS (USD)..................... 2,320
106,522 *Grupo Mexicano de Desarrollo (Series L) ADS (USD)..................... 2,157
775,000 *Grupo Posadas......................................................... 763
24,600 Grupo Radio Centro ADS (USD).......................................... 415
116,400 Grupo Sidek ADR (USD)................................................. 989
36,447 shs. *Grupo Sidek (Series L) ADR (USD)...................................... $ 642
9,500 *Grupo Simec ADR (USD)................................................. 235
10,000 Grupo Situr `B'....................................................... 30
41,000 Grupo Situr ADR (USD)................................................. 1,230
5,000 Grupo Situr Convertible ADR (USD)..................................... 150
44,308 Grupo Televisa ADR (USD).............................................. 1,966
44,500 *Grupo Tribasa ADS (USD)............................................... 1,396
164,925 *International de Ceramica `C'......................................... 864
75,000 *Jugos del Valle....................................................... 415
40,120 Panamerican Beverages (USD)........................................... 1,379
51,000 *Sears Roebuck ADS (USD)............................................... 1,196
805,000 *Seguros Comercial Americana........................................... 492
18,000 Servicios Financieros Quadram ADR (USD)............................... 261
315,727 Telefonos de Mexico ADS (USD)......................................... 17,365
831,183 Tolmex `B'............................................................ 12,097
TOTAL MEXICO 72,992
- ------------------------------------------------------------------------------------------------------------
PERU -- 1.3%
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS
208,069 Backus y Johnston Cerveceria.......................................... 512
695 Cementos Lima......................................................... 283
14,000 Compania de Seguros la Fenix Peruana.................................. 241
57,500 Enrique Ferreyros..................................................... 103
77,535 Explosivos............................................................ 390
120,000 *Southern Peru Copper.................................................. 738
2,267
CORPORATE BOND
290,000 USD International Financial Holdings, 6.50%, 8/1/99....................... 344
TOTAL PERU 2,611
- ------------------------------------------------------------------------------------------------------------
VENEZUELA -- 0.9%
- ------------------------------------------------------------------------------------------------------------
COMMON STOCKS
12,000 shs. Corimon ADR (USD)..................................................... 120
158,333 *Mavesa ADR (USD)...................................................... 890
45,500 *Sudamtex de Venezuela ADR (USD)....................................... 330
60,000 *Venezolana de Prerreducidos Caroni GDS (USD).......................... 375
TOTAL VENEZUELA 1,715
</TABLE>
7
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price Latin America Fund / Statement of Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 6.1%
- ------------------------------------------------------------------------------------------------------------
<C> <S> <C>
COMMERCIAL PAPER
$5,600,000 Ciesco, 4.80%, 11/1/94................................................ $ 5,599
47,000 Harvard University, 4.75%, 11/1/94.................................... 47
6,490,000 Preferred Receivables Funding, 4.85 - 4.88%, 11/21 - 11/29/94......... 6,422
TOTAL SHORT-TERM INVESTMENTS 12,068
- ------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS IN SECURITIES -- 98.5% (COST -- $195,548) 195,473
- ------------------------------------------------------------------------------------------------------------
Other Assets Less Liabilities -- 1.5% 2,962
NET ASSETS CONSISTING OF:
Accumulated realized gains/losses......................................... $ (2,386)
Net unrealized depreciation of investments................................ (76)
Paid-in-capital applicable to 19,228,619 shares of $0.01 par
value capital stock outstanding; 2,000,000,000 shares of
the Corporation authorized............................................ 200,897
--------
NET ASSETS -- 100.0% $198,435
========
NET ASSET VALUE PER SHARE $10.32
======
</TABLE>
* Non-income producing
(USD) U.S. dollar denominated
The accompanying notes are an integral part of these financial statements.
8
<PAGE>
- --------------------------------------------------------------------------------
Statement of Operations
- --------------------------------------------------------------------------------
T. Rowe Price Latin America Fund / From December 29, 1993
(Commencement of Operations) to October 31, 1994
<TABLE>
<CAPTION>
Amounts in Thousands
-------------------------
<S> <C> <C>
INVESTMENT INCOME
Income
Dividends (net of foreign taxes of $59)...................................... $ 1,277
Interest..................................................................... 536
-------
Total income................................................................. $ 1,813
Expenses
Investment management fees................................................... 1,195
Shareholder servicing fees & expenses........................................ 719
Custodian and accounting fees & expenses..................................... 163
Registration fees & expenses................................................. 50
Prospectus & shareholder reports............................................. 37
Legal & auditing fees........................................................ 17
Proxy & annual meeting expenses.............................................. 10
Directors' fees & expenses................................................... 7
Organizational expenses...................................................... 4
-------
Total expenses............................................................... 2,202
-------
Net investment income.......................................................... (389)
-------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS
Net realized loss
Securities................................................................... (2,386)
Foreign currency transactions................................................ (12)
-------
Net realized loss ............................................................. (2,398)
Change in net unrealized appreciation or depreciation
Securities................................................................... (75)
Other assets and liabilities denominated in foreign currencies............... (1)
-------
Change in net unrealized appreciation or depreciation.......................... (76)
-------
Net loss on investments........................................................ (2,474)
-------
DECREASE IN NET ASSETS FROM OPERATIONS......................................... $(2,863)
=======
</TABLE>
The accompanying notes are an integral part of these financial statements.
9
<PAGE>
- --------------------------------------------------------------------------------
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
T. Rowe Price Latin America Fund / From December 29, 1993
(Commencement of Operations) to October 31, 1994
<TABLE>
<CAPTION>
Amounts in Thousands
--------------------
<S> <C>
INCREASE (DECREASE) IN NET ASSETS
Operations
Net investment income.................................................. $ (389)
Net realized loss on investments....................................... (2,398)
Change in net unrealized appreciation or
depreciation of investments.......................................... (76)
--------
Decrease in net assets from operations................................. (2,863)
--------
Capital share transactions
Sold 23,904 shares..................................................... 245,582
Redeemed 4,675 shares.................................................. (45,043)
Redemption fees........................................................ 759
--------
Increase in net assets from capital share transactions................. 201,298
--------
Total increase........................................................... 198,435
NET ASSETS
Beginning of period.................................................... --
--------
End of period.......................................................... $198,435
========
</TABLE>
10
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements
- --------------------------------------------------------------------------------
T. Rowe Price Latin America Fund / October 31, 1994
NOTE 1 - SIGNIFICANT ACCOUNTING POLICIES
T. Rowe Price International Funds, Inc. (the Corporation) is registered under
the Investment Company Act of 1940. The Latin American Fund (the Fund), a non-
diversified, open-end management investment company, is one of the portfolios
established by the Corporation.
A) Valuation - Equity securities listed or regularly traded on a securities
exchange (including NASDAQ) are valued at the last quoted sales price at the
time the valuations are made. A security which is listed or traded on more than
one exchange is valued at the quotation on the exchange determined to be the
primary market for such security. Other equity securities and those listed
securities that are not traded on a particular day are valued at a price within
the limits of the latest bid and asked prices deemed by the Board of Directors,
or by persons delegated by the Board, best to reflect fair value.
Debt securities are generally traded in the over-the-counter market and
are valued at a price deemed best to reflect fair value as quoted by dealers who
make markets in these securities or by an independent pricing service. Short-
term debt securities are valued at their cost which, when combined with accrued
interest, approximates fair value.
For purposes of determining the Fund's net asset value per share, the
U.S. dollar value of all assets and liabilities initially expressed in foreign
currencies is determined by using the mean of the bid and offer prices of such
currencies against U.S. dollars quoted by a major bank.
Assets and liabilities for which the above valuation procedures are
inappropriate or are deemed not to reflect fair value are stated at fair value
as determined in good faith by or under the supervision of the officers of the
Fund, as authorized by the Board of Directors.
B) Currency translation - Foreign currency amounts are translated into U.S.
dollars at prevailing exchange rates as follows: assets and liabilities at the
rate of exchange at the end of the respective period, purchases and sales of
securities and income and expenses at the rate of exchange prevailing on the
dates of such transactions. The effect of changes in foreign exchange rates on
realized and unrealized security gains or losses is reflected as a component of
such gains or losses.
C) Other - Income and expenses are recorded on the accrual basis. Investment
transactions are accounted for on the trade date. Realized gains and losses are
reported on an identified cost basis. Dividend income and distributions to
shareholders are recorded by the Fund on the ex-dividend date. Income and
capital gain distributions are determined in accordance with federal income tax
regulations which may differ from generally accepted accounting principles.
NOTE 2 - ORGANIZATION
The Fund was organized on November 4, 1993, and had no operations prior to
December 29, 1993, other than those related to organizational matters.
NOTE 3 - INVESTMENT TRANSACTIONS
As a part of its investment program, the Fund engages in the following
activities, the nature and risk of which are set forth more fully in the Fund's
Prospectus and Statement of Additional Information.
A) Emerging Markets - The Fund has investments in securities of companies
located in emerging markets. Future economic or political developments could
adversely affect the liquidity or value, or both, of such securities.
B) Other - Purchases and sales of portfolio securities, other than
short-term and U.S. Government securities, aggregated
11
<PAGE>
- --------------------------------------------------------------------------------
Notes to Financial Statements (Cont'd)
- --------------------------------------------------------------------------------
$199,002,000 and $13,144,000, respectively, for the period ended October 31,
1994.
NOTE 4 - FEDERAL INCOME TAXES
No provision for federal income taxes is required since the Fund intends to
qualify as a regulated investment company and distribute all of its taxable
income. The Fund has unused realized capital loss carryforwards for federal
income tax purposes of $2,386,000 which expire in 2002. The Fund intends to
retain gains realized in future periods that may be offset by available capital
loss carryforwards.
In order for the Fund's capital accounts and distributions to
shareholders to reflect the tax character of certain transactions, $389,000 of
undistributed net investment income and $12,000 of undistributed net realized
losses were reclassified as a decrease to paid-in-capital during the period
ended October 31, 1994. The results of operations and net assets were not
affected by the reclassifications.
At October 31, 1994, the aggregate cost of investments for federal
income tax and financial reporting purposes was $195,548,000 and net unrealized
depreciation aggregated $75,000, of which $17,708,000 related to appreciated
investments and $17,783,000 to depreciated investments.
NOTE 5 - RELATED PARTY TRANSACTIONS
The Fund is managed by Rowe Price-Fleming International, Inc. (Price-Fleming),
which is owned by T. Rowe Price Associates, Inc. (Price Associates), Robert
Fleming Holdings Limited, and Jardine Fleming Holdings Limited under a joint
venture agreement.
The investment management agreement between the Fund and Price-Fleming
(the Manager) provides for an annual investment management fee, computed daily
and paid monthly, consisting of an Individual Fund Fee equal to 0.75% of average
daily net assets and a Group Fee. The Group Fee is based on the combined assets
of certain mutual funds sponsored by the Manager or Price Associates (the
Group). The Group Fee rate ranges from 0.48% for the first $1 billion of assets
to 0.31% for assets in excess of $34 billion. The effective annual Group Fee
rate at October 31, 1994, and for the period then ended was 0.34%. The Fund pays
a pro rata portion of the Group Fee based on the ratio of the Fund's net assets
to those of the Group.
During the period ended October 31, 1994, the Fund, in the ordinary
course of business, paid commissions of $1,000 to, and placed security purchase
and sale orders aggregating $145,000 with, certain affiliates of the Manager in
connection with the execution of various portfolio transactions at the direction
of Price-Fleming.
T. Rowe Price Services, Inc. (TRPS) and Retirement Plan Services, Inc.
(RPS) are wholly owned subsidiaries of Price Associates. TRPS provides transfer
and dividend disbursing agent functions and shareholder services for all
accounts. RPS provides subaccounting and recordkeeping services for certain
retirement accounts invested in the Fund. Price Associates, under a separate
agreement, calculates the daily share price and maintains the financial records
of the Fund. For the period ended October 31, 1994, the Fund incurred fees
totalling approximately $672,000 for these services provided by related parties.
At October 31, 1994, these investment management and service fees payable were
$291,000.
12
<PAGE>
- --------------------------------------------------------------------------------
Financial Highlights
- --------------------------------------------------------------------------------
T. Rowe Price Latin America Fund
<TABLE>
<CAPTION>
For a share outstanding
throughout the period
------------------------
From
December 29, 1993
(Commencement of
Operations) to
October 31,
1994
------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD............................ $10.00
------
Investment Activities
Net investment income....................................... (0.03)
Net realized and unrealized gain............................ 0.29*
------
Total from Investment Activities................................ 0.26
------
Redemption fees added to paid-in-capital........................ 0.06
------
NET ASSET VALUE, END OF PERIOD.................................. $10.32
======
- ----------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Total Return.................................................... 3.2%
Ratio of Expenses to Average Net Assets......................... 1.99%+
Ratio of Net Investment Income to Average Net Assets............ (0.35)%+
Portfolio Turnover Rate......................................... 12.2%+
Net Assets, End of Period (in thousands)........................ $198,435
- ----------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* The amount presented is calculated pursuant to a methodology prescribed by
the Securities and Exchange Commission for a share outstanding throughout the
period. This amount is inconsistent with the Fund's aggregate gains and
losses because of the timing of sales and redemptions of Fund shares in
relation to fluctuating market values for the investment portfolio.
13
<PAGE>
- --------------------------------------------------------------------------------
Report of Independent Accountants
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors of
T. Rowe Price Latin America Fund
In our opinion, the accompanying statement of net assets and the related
statements of operations and of changes in net assets and the selected per share
data and information (which appears under the heading "Financial Highlights")
present fairly, in all material respects, the financial position of T. Rowe
Price Latin America Fund (one of the portfolios constituting T. Rowe Price
International Funds, Inc.) at October 31, 1994, the results of its operations,
the changes in its net assets and the selected per share data and information
for the fiscal period presented in conformity with generally accepted accounting
principles. These financial statements and selected per share data and
information (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audit. We conducted our audit
of these financial statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audit, which included confirmation of securities at October 31, 1994 by
correspondence with custodians and brokers and, where appropriate, the
application of alternative auditing procedures for unsettled security
transactions, provides a reasonable basis for the opinion expressed above.
PRICE WATERHOUSE LLP
Baltimore, Maryland
November 17, 1994
14
<PAGE>
- --------------------------------------------------------------------------------
T. Rowe Price No-Load Mutual Funds
- --------------------------------------------------------------------------------
STABILITY
Prime Reserve
Summit Cash Reserves
U.S. Treasury Money
California Tax-Free Money
New York Tax-Free Money
Summit Municipal Money Market
Tax-Exempt Money
CONSERVATIVE INCOME
Adjustable Rate U.S. Government
Short-Term Bond
Short-Term Global Income
Summit Limited-Term Bond
U.S. Treasury Intermediate
Florida Insured Intermediate Tax-Free
Maryland Short-Term Tax-Free Bond
Summit Municipal Intermediate
Tax-Free Insured Intermediate Bond
Tax-Free Short-Intermediate
INCOME
Global Government Bond
GNMA
New Income
Spectrum Income
Summit GNMA
U.S. Treasury Long-Term
California Tax-Free Bond
Georgia Tax-Free Bond
Maryland Tax-Free Bond
New Jersey Tax-Free Bond
New York Tax-Free Bond
Summit Municipal Income
Tax-Free Income
Virginia Tax-Free Bond
AGGRESSIVE INCOME
High Yield
International Bond
Tax-Free High Yield
CONSERVATIVE GROWTH
Balanced
Capital Appreciation
Dividend Growth
Equity Income
Equity Index
Growth & Income
Spectrum Growth
Value
GROWTH
Blue Chip Growth
European Stock
Growth Stock
International Stock
Japan
Mid-Cap Growth
New Era
Small-Cap Value
AGGRESSIVE GROWTH
International Discovery
Latin America
New America Growth
New Asia
New Horizons
OTC
Science & Technology
PERSONAL STRATEGY FUNDS
Personal Strategy Income
Personal Strategy Balanced
Personal Strategy Growth
Call if you want to know about any T. Rowe Price Fund. We'll send you a
prospectus with more complete information, including management fees and other
expenses. Read it carefully before you invest or send money.
15
